High-net-worth individuals struggle to spend their wealth

“I’m having very slow spend, not even at 30% budget by 3PM. I have decent CPA though, sitting around $6 average. submitted by /u/Still-Trainer-2806 [link] [comments]”

“Proud of you. Now really confused that all you can think of to do with money is go on vacation 😂 [re: Hitting zero marginal utility of spend]”

“What's your annual spend like including school, taxes, health, portfolio/banking fees and properties upkeep? [re: 37 yo M $22m net worth. Am I doing it right? Criticism welcome. AMA too why not 🤷🏻‍♂️]”

“We are in a tax state, I wish I could tell you but we had a low cost of living and kept our expenses low. Lifestyle hasn’t crept up significantly except we now travel nicer and get to buy some nicer things (no recurring expenditures)”

“congrats! now you will have to worry about completely different problem. Growth doesn't stop today and you will soon hit with lots of tax saving challenges and estate tax issue.”

“I can relate with you. At some point you can only eat so much, doesn't matter if it's the freshest caviar or champagne. We paid an obscene amount of money for a recent dinners and hotels in SF and I came to the same conclusion. Think of it as the Pareto of joy in spending. The first tenth of $ buys you 80% of happiness. Every incremental tenth afterwards just helps you close down the next 2% each. That and you can, maybe should never, hit 100% happiness each time or it becomes the new no”

“I'm not a huge spender, but then I got exposed to private aviation. Pushed my number up a bunch.”

“For higher net worth and higher income people, especially in a higher income state, unfortunately that’s the norm.”

“I am low key in the sense that my life is private. It isn’t on social media, no one besides close family know what we have or where we go. I still blew past 500k a year spend, several times over.”

“1/400th of your NW each month comes out to a 3% annualized spend. Just a different way to visualize it”

“Right, I should have mentioned this earlier. One typical solution is to take up collecting expensive things that you like looking at or having (this is VERY important) as a hobby. If you'd like to try mineral collecting, for example, I can point you to what's probably the best book on the topic (cuz that's my vice.)”

“Yup. If my portfolio keeps increasing I'm thinking of creating my own Physics prize, where I want to support a researcher that is thinking new ideas. I'm also looking into AI-mediated health care and life extension. Nothing I can find there yet, oddly enough.”

“I feel like this kind of post is like a broken record around ChubbyFIRE, but I suppose that's why we are all here... The background : My wife and I have stable jobs in a HCOL area, grossing between $400k and $450k, depending on bonuses. We are DINKs and have zero plans for kids (and are past that age anyway). Several years back we were targeting retiring when I hit 55, and then that moved to 50... and now I really think 47 is the goal (July 2027). We are simply sick of the corporate grind, a”

“I am currently 34, have a $100M self-made net worth from starting and running 2 businesses. Have never had an ounce of desire to be on one of these lists.”

“I could move anywhere I wanted and do things I've wanted to do but I chose to stay where I am because that's where all the friends I see every week are. Life is more important than money after a certain level. Take the 6.5M and grow it, you won't feel the lost difference.”

yep

“A $5M or $6M purchase today is a change of -$20M or greater in 20 years. That's kinda it.”

“Maxing out what I can. Anything that's much bigger than what I'm doing is going into audit territory.”

“He said he expect higher income in his retirement years given how large his 401k will be. On top of that he has a large taxable Account. Traditional only Makes sense if you’re retirement years you expect a lower tax bracket. He says he will earn more! In retirement.”

“Finance exec here — this is a capital allocation problem, which I do for a living. My framework: set a personal hurdle rate. If your investments return ~7% real, spending $X today "costs" $X*(1.07) n. Real math, but past a point it becomes decision paralysis — same thing happens to companies that hoard cash and underinvest. My rule: run the opportunity-cost math on big recurring expenses (housing, cars), not one-off experiences. The 30-year compounding on a $3k vacation is tiny relativ”

“You can spend it, or your estate can give at least 40 percent of it to the government when you die. You're already well over the estate tax exemption, so spend it or donate it, but further accumulation is kinda pointless.”

“The more you have, the less a 4% SWR matters man, your spend becomes so intensely discretionary that at that point, you're just spending on what's fun. So you should stop thinking about it with FIRE math and start thinking about it with enjoyment in mind. The bigger lesson is: you are wasting your life accumulating an asset that is getting in the way of more important things. Rent the baller house. FIRE now. You won capitalism. You're now acting from a place of self-esteem issues and”

“It would be a shame to live a smaller life than you have to. Here are some ideas: Upgrade the house, buy better furniture/mattresses, get a sauna, movie room, hot tub, make a home gym, auto shades, make a salt cave room, marble floors, luxury fixtures, premium cabinets, heated floors. Buy newer car Get massages multiple times a week Business class travel and stay in Four Seasons and other luxury hotels across the world. Travel longer than usual. Have a private guide and private car service. Eat”

“Why does everyone always forget about taxes? they aren't forgetting about it, they're excluding it as a lesson best left to the reader. taxes are an expense. it's included in your spending. find your number accordingly.”

Hahahaha

“But I never regret it, our family enjoy it so much and we created so much good memories. This is good to hear. I haven't regretted any of my previous big spends for that same reason. But on the other hand my previous big spends have been relatively quickly out-scaled by growing net worth. I don't expect my net worth to keep growing at the pace it has and I guess thats what stops and makes me pause before diving in to the biggest thing yet. Appreciate the input.”

“Hi all. 42M here with $40M NW. Not RE yet but hoping to in the next few years. In the meantime I have $1.4M coming in each year, roughly, before tax. Medium COL area. Wife and 3 kids, 8-16. I'm thinking about buying a big a third home. Primary residence is roughly $2.5M. Negligible carrying cost. Second home $1.75M or so with maybe $100k/yr carrying cost. Third home would be $5.5M-$6M and big costs. As high as $350k I would guess. I've crunched the numbers many different ways. I can affo”

“Actually the better thing to learn is that you don't need to put every dollar to use and optimize your net worth. You can spend more when an opportunity presents itself.”

“The same way you optimized for a dream life where you are financially free, you have to now optimize for your authentic self, the life you were born to live - that which gives you true fulfillment. My company is creating a app in collaboration with a spiritual master's lineage that maps out user's authentic self. It works on a process we have designed based on spiritual teachings that transformed thousands of lives. It will help you figure out what from the soul level, what are the thing”

“I would recommend leisure activities that involve flow state activity, learning new things and/or acquiring/practicing some skill. A participatory sport is a good start. Take the process seriously but not the outcomes. It’s unlikely a part time job is going to give you this.”

“Take 6-12 months off. Call it a sabbatical or mini-retirement and then re-assess how you’re feeling. Enjoy!”

“I wish that worked. My 70 year old folks have saved their whole lives hitting 20M+. I constantly tell them to spend it and if they don't, I appreciate all the first class tickets and nice cars they will buy me. Their response is always, "When Im dead, why do i care?" Its really frustrating.”

“Experiment with experiences more. And making some really good friends. And helping others. That’s all there is. But it requires planning and execution and a certain courage. Go see the bison migration in Africa, swim a race in the ocean, hike the lower Himalayas, help 3rd world people get jobs - there is just sooo much to try. Something will click abd that’s the true fatfire. All these fatfire types who aren’t frail doing train trips in the alps - embarrassing.”

“YES! It’s really hard. I think I’m almost over the hump, buying things we would not have in the past, getting cleaners regularly etc. If I wasn’t restructured out, I’m sure I would still be working. My spouse is still considering if we move our target out to $12m. In the back of our minds we always worry that we may need to support both sets of parents in retirement and set kids up with a safety net beyond just what we need. I’m certainly thankful for what we have for now. Just need to work out”

bruh.... I'm in a shithole country $1m and I can actually retire today...

“Damn, for a bunch of people living on a wealth board, many of you claiming to have no thoughts of your wealth. is, well, amusing.”

“I’m the same age as you and the same net worth and I don’t wish I had anything other people have. I’m blessed to have everything I need and then some. Very odd that someone who is 55 with 10M would even think this question, let alone post it to the internet.”

“I think it would be helpful to frame this as 'what would you do differently if you had that extra $10M'? We often forget that money is just a tool to allow us to do things we want to do.”

“I dream and think about money constantly too. Is it unhealthy? Yeah, but it is what it is. For me, that number is what you currently have ($10M NW). One of my friend has that NW and he has so much more flexibility than I do especially when it comes to investing or buying RE. Hope that gives you some perspective to appreciate what you have today! I know I need that reminder often.”

“hedonic treadmill - Money has diminishing returns on your happiness and at all income levels want 2x of what they currently have.”

“So many comments saying he is fine to retire, but I doubt the $225k worth of expenses includes taxes considering their income is 1.2 million. I'm not sure where he lives, but California is likely because he says he works for big tech. After the health care cost increases, and taxes, I wouldn't be comfortable retiring without being willing to cut expenses”

“The question is what lifestyle did you start at to think $500k annual is not lifestyle creep.”

“I retired at 41 with significantly less assets and still have more than enough. It’s been great. There are myriad things to do other than work for money you don’t need.”

“Pretty much my position, I've had high income ($1M-$10M/year) the past 13 years. I am now sitting on $50M liquid net worth with no business sale. https://i.imgur.com/kpioF11.png If my investments go up another 7%/year along with my income remaining about the same, I'll have $100M liquid in 4.5 years.”

Thanks, yes I turned off dividend reinvest 2 years ago, sure, makes sense

“Very insightful. Thank you!! I have some concentration too with apple stock at 1.5m of the total. This was through buying 100k in 2010ish and just holding onto it. I think I will also be embarking on diversification and selling 10% a year using 4% and investing 6% in the sp500 all while being retired. Lots to look forward to :). Also looking forward to your subsequent posts”

“Thanks, this is really helpful and yes I think I am going to do another tax bracket at least to make a serious dent. Thanks for sharing about how you have a similar problem with divesting from a concentrated position, it's a weird (good!) problem I never really expected to face. I feel similarly about how because the diversified portion of my portfolio already supports my current spending comfortably, I don't feel a strong pressure to diversify, but I am getting way too over-extended and”

“Why does being wasteful = fatFIRE to you? Almost anyone can afford to do this. It's still wasteful. I don't understand this subs mentality on waste. Making millions of dollars means you stop caring about the planet? Never cared? I don't get it.”

“So I was actually interested in this and found one of my older posts for 2016 https://www.reddit.com/r/financialindependence/comments/6kz9sp/comment/djpvy4w/?context=3 and https://www.reddit.com/r/financialindependence/comments/6fszd2/comment/dillft0/ Reproduced here: The bull market has made lots of us winners at the moment. For 2016 I lucked into a 25% return vs the 9.5% of the S&P 500. I ended up taking on much more risk than I should've to get that, and have no expectations that this”

“Not a tax loophole but I’ve found that many people in your position work for too long and don’t build enough early retirement time into their plan to unwind their assets. Sometimes they wind up with a big RMD bomb. Also often when both people in the relationship are earning W2 income they don’t calculate the huge tax brackets into the equation either. Let’s say one person is making $500k and the other $200k. That $200k earner in a high tax state is probably paying 50% in income taxes and forcing”

“Thank you for the nice comment! It sounds like you're in a really good position and could probably retire if you wanted (depending on expenses I guess). Regarding fear of actually retiring, yeah I also did one more year for like 2 years so I get it. For me, I've known a couple much more successful people who are still working into their old age, and at this point I don't think they even know what they're working for, they seem filled with regret and longing for getting their time”

“Read “Strangers in Paradise” by Grubman. These feelings (and related questions) are common for first gen wealth creators. I discovered this book on this sub, and it has helped frame my thinking on how to approach managing our wealth for current and future generations.”

“Adjusted up a bit in travel (about 150k annually) but income still very much outpaces it with about 500-600k passive and our business still pulling in 900-1m”

“Bit of both. No particular plan here, just living my best life, which leads to higher spending.”

“I think that's a great way to put it. Being rich and having a lot of money are two different things that shouldn't be conflated.”

“Do what what you're comfortable with at your own pace. Just look at all the high NW people, billionaires, etc., they are also heavily concentrated. You're already diversified enough, and your spend is low enough to be covered by just your dividends alone. You don't even need all your cash, you can start buying index funds heavily with most of your cash and just sell nvidia shares regularly to fill the cash bucket. If your entire nw was only nvidia, then taking the 30% - 50% tax hit q”

“on track to dying with too much money, of which i am in the same boat. if the regular expenses are low and feel fine i dont think its worth forcing it. especially since a lot of spending comes with overhead (cars, etc). instead, you could pay for friends/family flights and take them on all expenses paid trips. you could also look into attaining status with a preferred hotel brand through continued lavish stays and spending to sort of gamify it. also, while young & able, take more adventurous”

“It sounds like you need to sell to the point of maxing out a couple more tax brackets if you really want to make a dent in the NVDA position. Because your diversified portfolio is sufficient to cover your expenses, diversification is not really a necessity. I have a similar situation where I still have a concentrated position from the mid-1980s with gains of over 1 million percent (pre-IPO ISO shares). I kept selling off portions since retiring a couple of decades ago. It was down to just 20% of”

“Great write up! I especially enjoyed this part: “Having full control of your time is the wealthiest part of being fatfire (or any type of fire), not the big numbers. What's the point of expensive watches if you have to check the time to go to work for someone else.””